Decided Jun 15, 2006
Case Ruling: Empire HealthChoice Assurance v. McVeigh
A 5-4 Court decided that federal jurisdiction does not extend to controversies over insurance contracts under the Federal Employees Health Benefits Act. Thus, state courts are the proper venue for contract disputes arising between federal employees and insurance companies, which may result in inconsistent outcomes across states.

Empire Healthchoice Assurance sued the estate of a deceased federal employee who received $157,000 in insurance benefits as the result of an injury. The wife of this federal employee had won $3.2 million in a separate lawsuit; Empire Healthchoice claimed reimbursement because the beneficiary was compensated for the same injury by a third party.

HELD:
Ginsburg, joined by Roberts, Stevens, Scalia, and Thomas

The Court ruled that under the Federal Employees Health Benefits Act, state courts, not federal courts, are the proper forum for a contracts lawsuit by a plan administrator seeking reimbursement for medical costs. Empire, the Court ruled, had not demonstrated a "significant conflict between an identifiable federal policy or interest and the operation of state law."

DISSENT: Breyer, joined by Kennedy, Souter, and Alito

The dissenting opinion asserted that the dispute should have been deliberated at the federal level because, in part, "there is little about this case that is not federal."

ORIGINAL HOLDING: Sotomayor

Judge Sotomayor, then on the Second Circuit prior to her Supreme Court nomination, found no federal jurisdiction because Empire failed to show that New York state law "significantly conflicts" with federal interests. The Supreme Court affirmed Sotomayor's decision.